Baseball Primer has a lengthy thread going about the story, the denial, and of course lots of Pete Rose bashing.

You should click that link, because I can't do justice to the variety of points that were made. I'll mention a few, though. First, the idea that MLB intentionally floated the false story. There's some conspiracy theory stuff about MLB trying to discredit BP, but that makes no sense, because why should BP care? Yeah, they diss MLB left and right every chance they get, but publicity is publicity for baseball.

Somewhat importantly was a quick mention that Will Carroll may have worked for independent weeklies back in the day, which would make me retract my statement about him being an analyst, not a journalist. His job is very "call up the sources"-centric, much more so than anyone else at BP, and while he does independent analysis of injuries (based on what he sees on TV, oftentimes) and of teams, he mostly does reporting. That's more weight for the "BP knows what they're doing" side of things.

Finally, someone pointed out this article at Salon. It's premium, so you have to watch an ad, but in it, Carroll is interviewed by King Kaufman. At one point, he says:

I've got a source in Cincinnati, in the Reds organization, a source in the MLB offices and an independent outside-baseball source. We've been following this one since about Saturday. And then when Pete Rose said he had a deal in place, kind of hinted at it in "Sunday Night Conversation" on ESPN, we really went after it whole hog.

So he's gotten a little more specific about his sources, one of which he essentially claims is working right under Bob DuPuy's nose. Meanwhile, my speculation about a Reds' source turns out to be true.
That outside-baseball source might well be someone from Rose's camp, maybe one of his lawyers or something. Or maybe Rose himself, if they got so lucky. He is outside baseball, isn't he? That is the whole point, after all.

More as it becomes available.